Kostiantyn Prymak
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How the UK Payment Systems Regulator Is Changing the Payments Ecosystem

Kostiantyn Prymak

Currently the Payment Systems Regulator is one of the main factors attempting to change the UK payments market. Its revised strategy has aimed at improved consumer protection, increased competition, and technological advancement. In these areas of business, clarity and compliance with the PSR’s requirements are all-important. A wider understanding of what the regulator has focused on, what this means for businesses, and how to ease the load in compliance terms, will definitely help businesses to make their operations grow. In this article we will conduct a research on the Payment Systems Regulator and find out how companies working in UK payment industry can easily comply with its requirements

New PSR Commitments

The mid-term review of the PSR’s five-year strategic plan has set the stage for improvements to the UK’s payment infrastructure. It has outlined three core commitments that will shape the remainder of its strategy, including:

Strengthening Consumer Protections

In any successful payments ecosystem, there needs to be confidence among consumers. The PSR will complete the work to ensure victims of APP scams are properly reimbursed, commission an independent review to check how effective these protections are so a system can be set up based on trust and fairness

Payment Technologies Advances

Meanwhile, the focus is on technological innovation, mainly open banking. PSR works in conjunction with the FCA in developing frameworks to improve open banking payments. A very good example relates to the promotion of Variable Recurring Payments because this will be more useful for consumers, more flexible in subscription or periodic expenses

Improvement in Payment Infrastructure

Together with the Bank of England, PSR calls for an upgrade of Faster Payments and the reform of Pay.UK to give a more resilient base for innovations in the future. This will serve to increase the efficiency, competition, and safety across the different ways to pay. This collaboration at the core of the PSR’s theme involves the regulator working with industry participants, trade bodies, and other regulators toward such ambitious aims

Meeting the PSR Requirements

The revised strategy of the Payment Systems Regulator is replete with clarity of vision and direction on UK payments regarding consumer protection, technology, choice and competition. Yet, there are certain areas in this ecosystem for businesses that require active attention by them as to what would constitute adherence to these intentions of regulators. Let’s take a look at the key criteria that businesses must be aware of:

Fraud Prevention and Reimbursement

Of all the risks, fraud is arguably the most threatening aspect of digital payments. The PSR is enhancing its regime of protections with respect to APP fraud. A business is required not only to have in place robust fraud-deterrent measures but also clear reimbursement procedures that can be called on when things go wrong. For businesses, this means:

Invest in fraud detection systems 

With monitoring features, in real time, the transactions and flag activity outside of the norm before fraud can occur

Ensure reimbursement

To victims of APP fraud as quickly and fair as possible to help regain consumer confidence in the overall process

Work with PSPs 

And others on sharing their knowledge and best practice for fraud prevention

Use of Open Banking Technologies

Open banking is one in which payment is more transparent, more flexible, and more innovative. The PSR also works with the FCA to develop open banking schemes, for example, variable recurring payments that allow consumers to give consent once for recurring payments without having them agree to a single payment several times, so it is more convenient and in a greater control for them. Here are some examples:

  1. Integrate open banking APIs in line with the PSR’s directives for safe and frictionless payment experiences of customers
  2. Enhance customer payment options by leveraging VRPs, especially for subscription-based services or any other form of recurring payments
  3. Give training to staff and customers on open banking technologies and their use, conscious of raising awareness to assuage concerns related to security and usability
Better Payments Infrastructure

The PSR, along with the Bank of England, is driving forward updates to a number of key payment infrastructures, including Faster Payments and Pay.UK. These need upgrading to be safer, more efficient, and competitive. Businesses will have to adapt if they want to remain interoperable and guarantee they remain compliant. Companies will have to ensure:

Compatibility with the new system

The respective payment systems must upgrade to the new infrastructure without disturbance

Engagement of PSPs in Payments

Thus, any business can directly engage a Payment Gateway along with other PSPs in close liaison for necessary technical upgrade or introduction in their functioning sans engaging the in-house teams of the company for the same work

Staying ahead of the regulatory timeline 

Businesses should keep themselves updated on any timelines published by the PSR, Bank of England, and Pay.UK for when the infrastructure changes come into force and what will be required

How to Simplify Compliance

The adherence to the regulatory requirements can be tricky for management, but again, the payment gateways help the businesses align with the standards laid down by PSR. Here’s how:

Built-In Fraud Protection

The payment gateways have integrated fraud case detection and prevention systems. These tools not only secure the transactions but also support businesses in complying with the PSR requirements, which call for the effective mechanisms of fraud prevention and reimbursement

Infrastructure Readiness

Integration with updated payment infrastructures such as Faster Payments. The payment gateways can offer compatibility with these systems so that when new frameworks are laid down, it would be easy for the business firms to adapt

Reduces Administrative Burden

With businesses seeking freedom to pursue business growth and innovation, much of the heavy lifting on the technical side and compliance falls to the payment gateways. Companies leverage such expertise by outsourcing compliance from a provider in their interest without wasting high internal resources

Why Proactive Compliance is Vital

Among the benefits business receives from proactive compliance are:

Consumer Trust

When the payment systems are sound and safe, confidence in dealing with your business will increase accordingly

Competitive Advantage

The shift into progressive technologies such as open banking puts the enterprise in the first positions of the changing marketplace

Economic Growth

Businesses build an innovative and strong financial environment through adherence to the regulatory objectives

Conclusion

This very ambition of the PSR, to realise a safer and more innovative payments environment, holds enormous opportunities for those businesses able to adapt and innovate. Those businesses that will be willing to learn about the priorities of the regulator and work in cooperation with trusted payment gateway providers will comply with requirements smoothly without compromising competitiveness

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